The Motley Fool

Battle of the skies moves to the ground

Virgin Australia Holdings Ltd (ASX: VAH) has drawn the ire of competitor Qantas Airways Limited (ASX: QAN) as it restructures to open up its share register to more international investors.

The current rules require Virgin’s international operation to be majority Australian owned, but do not place the same restrictions on its domestic airline. Virgin is planning the restructure to allow a greater foreign shareholding in the domestic business, while keeping the international arm in compliance with Australian law.

Qantas, perhaps unsurprisingly (and given its own restrictions under the Qantas Sale Act), has objected, telling the International Air Services Commission that:

“Qantas is very concerned that the proposed structure is likely to result in foreign persons having effective control of the day-to-day operations of [Virgin’s international business], in breach of Australia’s obligations under many air service agreements”

The Australian Financial Review today has suggested, I think rightly, that Qantas does not expect to be successful in its submission, but instead is using the issue to bring attention to its own limitations in light of a current Senate subcommittee hearing on the Qantas Sale Act.

In either circumstance, I continue to believe investment in airlines is a very, very difficult pursuit, and am more than happy putting my capital to work in other places.

If you are looking for ASX investing ideas, look no further than “The Motley Fool’s Top Stock for 2012.” In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

More Reading:

Scott Phillips is a Motley Fool investment analyst. You can follow him on Twitter @TMFGilla. The Motley Fool’s purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off it's high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!